Three sectors of the economy

Three sectors of the economy. Speaking about the three sectors of the economy, first of all we should define what the word “sector” means. Actually it has two meanings. The first is the sector as a part of the economy of a country.A particular sector consists of all the companies, which are involved in a particular area or work; & all companies, which are run according to a particular system or ownership or financial control. But usually the word “sector” is more often used in its second meaning – talking about different parts of the economy, such as public & private sectors.

So as we see, the economic system is not simple, on the contrary, economic infrastructure is very difficult & complex: all its parts & sectors depend on each over, & even our simple actions make all the sectors of the economy run. Saying “simple actions” I mean all our everyday activities.For example switching on the kettle for making a cup of coffee or opening a freeze, switching on the TV or turning on the light.

Doing all these things we gave no thoughts that “we are building economy”, I mean we make the economic infrastructure run, because all parts of the economy are involved in producing the simple kettle & the immense complex operations make the simple action like switching on the kettle possible: beginning with the building & maintenance of the power station that produced the electricity, the mining of coal & pumping of oil to fuel the generators, the laying of miles of cable to carry the current to our houses , the digging & smelting & milling of ore or bauxite into sheets of steel & aluminum, the cutting & pressing & welding of the metal into the kettle’s spout, shell & handle, & ending with the packaging, the advertising, the transportation of the kettle, & so on, & so on. So to cut a long story short the complexity of economic infrastructure is out of discussion.

So to make this complex system easier & more understandable the economists divided economy into three sectors: the primary, secondary & tertiary sectors.

The primary sector consists of agriculture, extractions of row materials from the earth & also fishing, hunting & wood extractions. So to this sectors activities like mining of coal, drilling for oil, farming belong to. The secondary sector is manufacturing industry, in which the row materials are turned & transformed into finished goods.For example building, cutting, rolling & pressing metal, making clothes & cars, laying cables & more others, because it seems to be the huge sector. & the tertiary sector includes the commercial services that enable industry to produce & distribute goods to their final consumers, as well as activities like education, health care & tourism. So trade, banking, insurance, warehousing, transport, communications, advertising belong to the tertiary sector.

As I’ve already said, the secondary sector (manufacturing) is huge & plays very important role in the economy of a country.

During long years it’s been the key sector of any countries & employed the majority of people. But now the situation is changing & changing really quickly.Technical progress rushes on us too fast & we need very little labour input to manufacture something. Does it mean that we are moving towards unemployment? Unfortunately (but may be fortunately) there are no the exact points of view of the tendencies in manufacturing & sometimes we can hear different (& even opposite) ideas about this process.

Different economists hold different supposition trying to predict the further development of this sphere of the economy & have different attitude to this process. Some of the economists suppose that the decline of manufacturing is inevitable process, but still we shouldn’t worry about unemployment, because now the advanced industrial countries no longer depend on heavy industry as they used to. Now people go on to an enormous industry persuading people they should buy these or that goods: they go on to design, arts, entertainment, music, advertising & so on – they go on to tertiary sector.

So while the secondary sector is declining, the tertiary sector is increasing & it’s not possible to stop this progressive change. It’s just inevitable.Others consider that the manufacturing industry isn’t declining, but just changing – convert itself to another level.

Now people have new needs & to satisfy & serve these needs we should invent many new products & these products can be made in the advanced countries in fact the technology of production means you need little labour input (as it was said above). In this case even countries with high labour costs (like Switzerland) produce low-tech products & other countries have to buy from them these manufactured goods.They’ve stumbled on a new secret, which is how to make low-tech products, sell them profitably, but actually make them in a country where in theory there should be no more manufacturing, & if we look at any of the successful economies of the 1990s, they all have a strong manufacturing component. For example dynamic Asian economies all based on manufacturing, the USA with their computers & cars (the car industry is coming right back in America). America is giant manufacturing economy, that is why it’s still the richest nation in the world.

So these economists extremely dubious of the theorists who say that manufacturing has no future in the advanced industrialized countries.

Talking about the sectors of the economy we should also say a few words about private & public sectors. & talking about private & public sectors we can’t but saying a few words about such processes as privatization & nationalization.When the private company is bought by the state & brought into the public sector, it’s nationalized in a process of nationalization.

A nationalized company is stated-owned.When the state returns a company to the private sector in a sell-off, it’s privatized. This is privatization. & now the privatization is very popular all over the world, but also every week we can hear how new privatized firms licking up huge pay rises while overcharging customers. & even some people want water & electricity industries, & may be more, to be renationalized.

But personally I think that it’s ridiculous.I don’t have anything against privatization, but I am sure that such industries as water, electricity & public transport should be state-owned. Because I don’t want free competition set prices for these basic industries & I can’t understand people who are always scolding privatized firms for overcharging customer (but it’s understandable, because privatized companies must pay higher taxes), but at the same moment they want these industries to be renationalized.

Now many privatized companies have very high sales & are very profitable, but I just want to say that I don’t think that all industries should be privatized, some of them should & must belong to the state, or they wouldn’t work the proper way.